UK digital businesses 'struggle with complexity of tax compliance'

Research carried out by HMRC has revealed that UK digital businesses 'struggle with the complexity of tax requirements'.

Market research company Ipsos MORI carried out the study on behalf of HMRC, and interviewed 50 UK digital tech businesses across a range of growth stages, sizes and sectors.

According to the research, digital businesses feel that tax compliance is important, but the associated complexity means 'greater scope for error'. A handful of digital tech businesses stated that VAT and payroll taxes are the 'most difficult' parts of their tax processes. Some felt that the tax systems for these are 'not designed with digital start-ups in mind'.

Businesses felt that support offered by HMRC 'could be improved' with a better understanding of cashflow issues and the impact they have on firms' ability to comply. Many digital tech businesses called for 'greater leniency' in terms of meeting deadlines for filing and making payments, and more flexibility around firms choosing whether to pay monthly or quarterly.

In addition, the research also revealed that digital tech businesses feel that it is important to have financial support with their taxes. Some make use of specialist tax agents to apply for financial support, such as Research and Development (R&D) tax relief, the Seed Enterprise Investment Scheme (SEIS) and the Enterprise Investment Scheme (EIS).